U.S. Bank embraces open banking with data-sharing agreements
U.S. Bank has signed data-sharing agreements with seven fintechs and data aggregators and will deliver customer account information directly through application programming interfaces.
The companies include DecisionLogic, which provides verification software; eMoney Advisor, a financial planning platform; FileThis, a document-aggregation platform; and the data aggregators Finicity and MX Technologies. The bank signed a similar agreement with Intuit in July.
Larger banks — JPMorgan Chase, Citigroup, and Wells Fargo — have signed similar contracts. Traditional banks have concluded that consumers are eagerly adopting fintech apps and are unlikely to abandon them. If banks want to stay in the picture, they need to work with the fintechs.
“We can see the screen scraping, the explosion of fintechs in the app store,” said Gareth Gaston, executive vice president of omnichannel Minneapolis-based U.S. Bank. “We’re seeing demand and that this is not going to slow down. We of course would prefer that the customer do everything in our mobile app, but we also know that that is unrealistic and there are some interesting and innovative solutions that our customers might want to use. We want to be able to enable that.”
The bank is embracing open banking, Gaston said, while trying to strengthen security, transparency and customers' control over their data.
Like other banks, U.S. Bank is firmly opposed to the practice of screen scraping, where data aggregators log in to an online banking program as a user and copy and paste their account information. Hence its work on developing APIs to feed that data directly to the companies.
“We believe in the use of APIs and tokenizing so the credentials aren’t shared and the process is ultimately transparent,” Gaston said. “Customers' sharing credentials with third parties is not secure, and we want to provide transparency and control, so we want to know which specific bits of information have been taken so we can make sure the customer understands and has the opportunity to consent. We think APIs are the best way to achieve that.”
Though several of the companies the bank has signed with are small, Gaston said the bank’s intent is to sign agreements with any and all relevant companies.